April Showers Bring May Flowers!
… And the Spring conference season! You can count on CAB attending the industry’s top Spring events. For example, last week Sean Gardner and Connor Harper from CAB and Dan Smith and John Arnold from Price Digest attended the 92nd Annual Inland Marine Underwriters Association conference in Tucson. The IMUA Annual Meeting always brings new insights into the complexities of inland marine commerce and as Bronze Sponsors of the event we continue to understand the value the organization brings to help insurers underwrite this highly complex segment of transportation risk.
CAB headed west to MCIEF
Yours Truly will be attending the Motor Carrier Insurance Education Foundation (MCIEF) May 17-19. Brian Stamper from Price Digest will be joining me at this must-attend conference for commercial fleet insurers. Speaking of must attend events, CAB is sponsoring the opening gala and we hope to see you all there. For those unfamiliar with MCIEF, the foundation plays a critical role educating insurers and agents about the art and craft of insuring commercial vehicles. If you’re not a member of this wonderful educational group and community, consider joining and signing up for courses today. Trust me you won’t regret it, just ask me!
Thanks, see you out there and have a great May!
CAB Live Training Sessions
Tuesday, May 9th, 12p EST
Chad Krueger will present BASICs Calculator-Score Simulations, Forecasting and more. A overview of one of CAB’s most powerful tools to identify the pain areas within a fleet. How to run score simulations, rank drivers, forecast scores, and much more.
Tuesday, May 16th, 12p EST
Mike Sevret will present CAB Express Report. This session will focus on an overview of CAB’s new Express Report. A 2-page summary of the key highlights of a company’s operation. This resource functions as a quick view of a motor carrier and is also a great, concise resource to share with motor carrier clients and prospects.
To register for the webinars, click here to sign into your CAB account. Then click live training at the top of the page to access the webinar registration.
You can explore all of our previously recorded live webinar sessions by visiting our webinar library.
CAB’s Tips & Tricks: Webinars are always available with CAB!
Are you looking to learn more about CAB’s tools and resources? Have you had a new employee start and you’re wanting to provide them with additional information on the resources available through CAB? Are you wanting to learn more about the transportation industry and how different exposures can be better identified and understood? Great news! All our twice monthly webinars are recorded and loaded to our webinars page. Via that page, you can share links with co-workers or watch videos on your own. Anyone with CAB credentials can access the training resources. If you start a video and you need to come back later, your spot in the video is saved automatically! Lastly, if there’s a topic you’re looking for and we don’t have it, please reach out to us and we’ll make sure to get it on the schedule!
THIS MONTH WE REPORT
More NOLA scammers headed to the slammer. Eight more individuals have been sentenced for their roles in a widespread staged-accident fraud scheme that’s netted 28 total indictments from New Orleans prosecutors so far. Targeting tractor-trailers changing lanes in zones where police, not troopers have jurisdiction, the scammers deliberately caused collisions by striking the truck in its blind spot using a “slammer vehicle.” Find out who of this villainous scum are headed to the slammer now.
Not even your furniture is safe apparently. Lots of fraud is being perpetrated out there in transportation land and drivers aren’t the only ones being hit. Mid-April the FMSCA announced the launch of a special operation aimed at household-goods-moving scams. Called Operation Protect Your Move, Overdrive reports the agency is deploying dozens of investigators across the country to address a significant uptick in complaints of movers holding people’s furniture hostage.
One toke over the line? Designated a top priority in 2022, researchers at the American Transportation Research Institute (ATRI) have launched a survey, “Impacts of Marijuana Legalization on Trucking Operations,” to better understand the effect legalization is having on the trucking operations. Here’s the news.
Feds wants to ID risky business … better. FMCSA is now proposing to change some of the 16 existing crash types and add four new types to expand the program to help better identify risky driving behaviors. The proposed changes are expected to double the size of the current CPDP and provide more data on the impacts of a carrier’s not preventable crashes on its overall safety. Find out what they’re proposing here.
Smile, you’re on in-cab camera! The American Transportation Research Institute (ATRI) released a new report investigating the trucking industry’s attitudes regarding driver-facing and road-facing cameras (DFCs/RFCs). Researchers conducted the study in an effort to better understand driver issues and perceptions related to the application of the technology. Get the driver’s point of view here.
Robotic drivers, automated inspectors, and synthetic safety. At the FMCSA’s annual Analysis, Research and Technology (ART) Forum, Associate Administrator Tom Keane explained “while [autonomous] vehicles continue to mature, we know that human drivers will be core to motor vehicle operations for many, many years to come.” Look into FMCSA’s crystal ball for glimpse of automated level 8 inspections and the future of autonomous trucking.
Over the long-haul Michigan is safer. According to the Michigan Department of Transportation, road fatalities caused by large trucks in Michigan have fallen by 2.9% between 2018 and 2022, with serious injuries lowered by 10.6%. Find out which states lead, and which states lag in this NHTSA truck crash fatality study.
Safety challenged new carriers most post-pandemic. Preliminary data compiled by the FMCSA reveals a steady rise in crashes involving large trucks among companies that entered the industry since 2018. Explore the not-so-pretty outcome of newcomers and other data driven insights from FMCSA’s recent research forum.
More vigilance, less risk, safer roads. Although National Work Zone Safety Awareness Week (April 17-21) has passed, the sentiments of the occasion haven’t. OverDrive editor Clifford Peterson explains it’s time to double down on the fight against safety complacency.
Florida man saves his own neck. Physics tells us that objects in motion tend to stay in motion. Just ask this Florida trucker about the two, 2.5-ton utility poles that pierced his cab after a “phantom” motorist cut him off. You be the judge but knowing when to duck and is not sound safety policy or a replacement for a header board.
May 2023 CAB Case Summaries
These case summaries are prepared by Robert “Rocky” C. Rogers, a Partner at Moseley Marcinack Law Group LLP.
Koganti v. PODS Enters., LLC, 2023 WL 3109294, DO80905 (Ca. Ct. App. Apr. 27, 2023). In this non-precedential ruling, the California Court of Appeals reversed the trial court’s grant of summary judgment to PODS, finding there was a triable issue of fact as to whether PODS operated as a motor carrier in the shipment being transported at the time of the motor vehicle accident involving the plaintiff. PODS hired TQL to arrange for the transportation of its customers’ goods, and TQL, in turn, hired IBY Transportation, who employed Ursati, to transport PODS-owned containers carrying goods belonging to PODS customers using IBY’s tractor-trailer After the accident, the plaintiff sued PODS, Ursati, and IBY, amongst other defendants. The complaint alleged negligent hiring of TQL by PODS and negligent entrustment. The complaint alleged employment of Ursati by PODS and the other defendants. The complaint further alleged PODS acted as a motor carrier, accepting its customers’ goods pursuant to its authority as a motor carrier and unlawfully brokered the goods to TQL to transport in violation of federal law. The complaint further alleged PODS violated federal law by not having appropriate registration and financial security requirements to act as an interstate broker. At all times relevant, PODS was registered with FMCSA as an interstate motor carrier but denied acting as such in this particular transaction, instead contending it acted solely as a shipper. The trial court granted PODS summary judgment, finding PODS met its burden to show it was merely acting as the shipper in the transaction. On appeal, the appellate court first found the trial court improperly excluded certain opinions of the plaintiff’s expert holding that PODS acted as a motor carrier. On the basis that the plaintiff’s expert opinions should have been considered, the appellate court found there were triable issues of fact as to whether PODS acted as a motor carrier in this given transaction. Accordingly, it reversed and remanded for trial the claims of negligence and vicarious liability against PODS.
Jackson v. Transport Corp. of America, 2023 WL 3058158, C.A. No. 1:21-cv-01325 (N.D. Ohio Apr. 24, 2023). In this personal injury action arising out of a tractor-trailer on tractor-trailer accident in a parking lot, the trial court granted the defendant motor carrier’s partial summary judgment on certain counts of the complaint. The court found the plaintiff failed to present proof meeting the Ohio standard for punitive damages: (1) hatred, ill will or a spirit of revenge; or (2) a conscious disregard for the rights and safety of other persons that has a great probability of causing substantial harm. The court reiterated “something more than negligence is required” to meet the standard and the plaintiff bears the burden of meeting proof by a preponderance of the evidence. Finding the plaintiff had failed this burden, it dismissed the punitive damages claim. The court likewise dismissed the negligent hiring count, finding that the motor carrier performed an extensive background check on the driver prior to hire and that “inexperience without more, falls short of a history of criminal, tortious or otherwise dangerous conduct.” The court also noted that courts are rare to find negligent hiring where the motor carrier followed the FMCSA hiring practices, which the motor carrier did in this instance. The court next found the mere fact that the driver had been involved in two prior incidents after hire was insufficient to support a negligent supervision or retention cause of action because the first merely involved hitting a pothole and the second involved failing to lower a landing gear properly, neither of which were similar or tortious or dangerous. On the same record, the court found there was insufficient support for negligent entrustment, finding there was not enough evidence to give notice to the motor carrier that the driver was incompetent to operate a tractor-trailer. Last, the court granted the motor carrier summary judgment on negligent inspection and repair counts, finding there was no evidence to support any alleged defect with the tractor-trailer which played any role in the accident. The ruling also addressed the Ohio-specific non-economic damages cap and whether the plaintiff could designate certain experts out of time.
Koch v. Lawson, 2023 WL 2923139, C.A. No. 4:22-cv-01647 (M.D.Pa. Apr. 12, 2023). In this personal injury lawsuit arising from a motor vehicle accident involving a tractor-trailer, the court found the plaintiff failed to plead with sufficient detail to support its claim for punitive damages based on wanton conduct. The court found, at most, the allegations alleged negligence against the driver, which was insufficient under applicable state law to support a punitive damages award. Notably, the court held that even if the pleading was construed to allege the driver fell asleep prior to the accident in question, “those allegations still fail to plead that [the driver’s’] falling asleep was more than negligent.” The court specifically noted that the pleading did not allege the driver made a conscious decision to drive while fatigued. At most, the court construed the pleading to allege the driver failed to comply with traffic laws, which, standing alone, are insufficient to support a punitive damages claim.
Fuller v. Payne, 2023 WL 2730260, C.A. No. 2:22-cv-01400 (N.D. Ala. Mar. 30, 2023). In this personal injury action, the court denied the defendant motor carrier and driver’s motion to dismiss a wantonness claim. The Complaint alleged the driver drove while knowingly fatigued, ignored the symptoms of sleep, exceeded a safe speed, and exceeded hours-of-service regulations. The court found such allegations were sufficient to survive a motion to dismiss. Since the court found the plaintiff alleged facts sufficient to give rise to a wantonness claim, the vicarious liability claim against the motor carrier likewise survived the motion to dismiss. However, the court found the plaintiff’s claims in support of the negligent entrustment, negligent hiring, training, retention, and supervision were merely conclusory—noting the lack of any facts plead in support of each claim. Accordingly, the court granted the motor carrier’s motion to dismiss these causes of action.
Simmons v. NAPA Transportation, Inc., 2023 WL 2671356, C.A. No. 2:21-cv-01442 (N.D. Ala. Mar. 28, 2023). The undisputed facts of this accident are that an operator of a commercial motor vehicle ran a red light and struck the plaintiff’s vehicle. The plaintiff filed suit asserting claims of: (1) negligence or wantonness against the driver; (2) negligent or wanton hiring, training, and supervision against the motor carrier; (3) negligent or wanton entrustment against the motor carrier; and (4) negligent or wanton maintenance against the motor carrier and the driver. The defendants conceded negligence but moved for summary judgment on the remaining causes of action. The driver had been a truck driver for almost forty years, having been in one serious accident approximately 25 years prior but for which he was told he was not at fault. Prior to hiring the driver, the motor carrier reviewed his driving history for the prior seven years and found no accidents, citations, or license suspensions/revocations. The motor carrier also required the driver to undergo a road test, complete a safety course, and obtain a valid medical card. The driver had memory problems from the prior accident, but no physician nor anyone otherwise told him that he was unable to drive a CMV. The court disagreed with the plaintiff’s assertion that the driver should not have operated a CMV based on the mere fact that the driver had memory problems, instead holding this allegation was insufficient to support a wantonness claim under state law. The court stressed the fact that a physician had never told the driver that he should not operate a CMV and that the driver held a valid medical card. With respect to the direct liability claims against the motor carrier, the court found there was not a sufficient causal connection between the driver’s disclosed prior accident and memory problems and any inability to operate a CMV so as to render him incompetent to drive, and accordingly the court granted summary judgment on each of these causes of action. Last, the court found the only evidence in the record was that the involved CMV was in good working order and therefore dismissed the negligent repair/maintenance cause of action. As such, the only remaining claim for trial was a simple negligence cause of action.
No decisions of note to report this month. But see Aspen America Ins. Co. v. Landstar Ranger, Inc. discussed in the cargo section.
Aspen America Ins. Co. v. Landstar Ranger, Inc., 2023 WL 2920451, C.A. No. 22-10740 (11th Cir. Apr. 13, 2023). In this cargo case arising from a stolen shipment of cargo valued at approximately half-a-million dollars, the Eleventh Circuit Court of Appeals held that the Federal Aviation Administration Authorization Act (“FAAAA”) preempted negligence claims against the transportation broker based upon the broker’s selection of a motor carrier. A shipper hired Landstar as a transportation broker to arrange for a motor carrier to transport a shipment of the shipper’s product from Colorado to Maryland. Landstar mistakenly turned the shipment over to a thief posing as a Landstar-registered carrier, who stole the shipment. The shipper’s insurer sued Landstar, claiming Landstar was negligent under Florida law in its selection of the carrier. Citing the broad definition of transportation under the regulations, the court found “a core part of the transportation-preparation service is, of course, selecting the motor carrier who will do the transporting.” In fact, the court agreed selecting the motor carrier is the broker’s “single job” in the transaction. As such, the court held the negligence claim fell squarely within FAAAA’s preemptive ambit. In so holding, the court found contrary rulings were inconsistent with the Morales mandate. In turning to whether the “safety exception” to FAAAA nevertheless saved the claims, the court explained for the claims to fall within the safety exception, (1) the negligence standard must constitute an exercise of Florida’s “safety regulatory authority,” and (2) that authority must have been exercised “with respect to motor vehicles.” The court found that while the claims met the first requirement, they did not satisfy the second. With respect to the first consideration, the court rejected any attempt to distinguish based upon property damage versus personal injury, finding both were an appropriate use of the state’s “safety regulatory authority.” However, citing the precise language, the court found the safety exception only applies when there is a direct connection between the state law and motor vehicles. Noting the distinct roles played by brokers and motor carriers, the court found the insurer’s allegations did not have any connection to motor vehicles, and, therefore, the safety exception was inapplicable.
Frankwoski v. Armstrong Transfer & Storage Co., Inc., 2023 WL 2898430, C.A. No. 2:22-cv-1153 (N.D. Ala. Apr. 11, 2023). In a case arising from a Nevada to Alabama move gone awry, involving an alleged number of different moving company entities, the court denied a motion to dismiss the sole, remaining Carmack claim by the various motor carrier entities. The court noted that the operative pleading alleged each of the various entities were involved in some capacity in the shipment, either in picking up or delivering the freight at various points in time. It then reiterated the rule under Carmack that the receiving carrier and the delivering carrier may be held liable to the shipper, but not connecting carriers. The court also explained that, under the Household Goods Transportation Act of 1980, any motor carrier providing transportation of household goods is responsible for the acts or omissions of its agents that are within the actual or apparent authority of the agent from the carrier or that are ratified by the carrier. Accepting the allegations of the pleading as true, the court found each of the entities either picked up or delivered freight, or were responsible via the aforementioned agency rule, and further, that the statutes do not alleviate an agent from liability—but instead, simply make the principal carrier also liable for the acts of its agents. As such, the court denied the respective defendants’ motion to dismiss.
AGCS Marine Ins. Co. v. Kool Pak LLC, 2023 WL 2916552, C.A. No. 2:22-cv-02775 (C.D. Cal. Apr. 12, 2023). The trial court denied a motor carrier’s motion for summary judgment on the basis that the shipper could not prove arrival in damaged condition. The case involved a shipment of packaged clam chowder. The shipper submitted proof via temperature logs showing the clam chowder exceeded 40 degrees Fahrenheit for between four and ten hours cumulative during the transport. The consignee rejected the shipment at delivery under FDA guidelines but did not attempt to determine the internal temperature of the clam chowder before disposing of it. The shipper also presented expert testimony of a foodborne illness expert in support of its position that the clam chowder arrived in damaged condition. The court rejected the carrier’s position that the individual packages needed to be checked at delivery, noting that they could have been returned to normal temperature by delivery but nevertheless subjected to elevated temperatures during the journey which might have caused them to spoil. The court further found the carrier did not meet its burden to establish the consignee failed to mitigate its damages, finding for the same reasons discussed above that there was no reasonable way to salvage the product. Last, the court rejected the carrier’s argument that the proper measure of damages was the re-manufacture cost plus shipment, noting there was no evidence in the record which showed that the shipper could not have sold, and made profits, on both batches of unharmed product.
Gulf Island Shipyards, LLC v. Mediterranean Shipping Co. (USA), Inc., 2023 WL 2691566, C.A. No. 1:22-cv-01018 (S.D.N.Y. Mar. 29, 2023). In this suit arising from alleged damage to a ship propeller sustained while the cargo allegedly was being offloaded from a MSC ship, the defendants moved to dismiss various negligence and breach of contract claims or, alternatively, moved for improper venue and for partial summary judgment on the $500 COGSA limitation of liability. Gulf Island contracted with Wartsila for the propeller, which was to be shipped from Italy to the United States. Pursuant to the agreement between Gulf Island and Wartsila, Wartsila was responsible for obtaining cargo insurance. Wartsila contracted with Martin Bencher to arrange for the shipment. Martin Bencher issued a Combined Transport Bill of Lading, identifying Wartsila as the shipper and Gulf Island as the consignee. Martin Bencher then contracted with MSC, a vessel operating as a common carrier, to transport the cargo from Italy to the United States. MSC issued a Sea Waybill identifying Martin Bencher (Scandinavia) as shipper and Martin Bencher (USA) as consignee. The vessel carrying the cargo arrived in the United States. In addressing the motion to dismiss the negligence-based causes of action, the court explained the initial inquiry was to determine whether the parties’ rights and obligations were governed by COGSA or the Harter Act. The court explained: the Harter Act applies to the carriage of goods to or from any port in the United States. COGSA superseded the Harter Act with respect to “the period from the time when the goods are loaded on [to a ship] to the time when they are discharged from the ship,” (i.e., “tackle to tackle”). The Harter Act thus governs where COGSA does not—that is, during the period “prior to loading and after discharge of cargo until proper delivery is made.” Thus, which law governs turns on the timing of the alleged damage to the propeller shaft. Rejecting MSC’s arguments that the exact timing of the damage could not yet be determined, the court stressed that, at the motion to dismiss stage, the pleadings of the complaint must be accepted as true, and the Complaint clearly alleged the damage occurred as the propeller was being offloaded from the ship by MSC agents. Noting that COGSA still applies during discharge, the court found that a plain reading of the pleading means COGSA applied. The court thereafter found that the COGSA claim against the Martin Bencher parties was untimely because they were not added to the action until after the one-year SOL under COGSA had run and there was no basis for relation back of the amended pleading to the original complaint. With respect to the breach of contract cause of action against Martin Bencher for failing to procure the cargo insurance, the court noted the pleading was based upon information and belief that the agreement between Wartsila and Martin Bencher required Martin Bencher to procure cargo insurance but could point to no such contractual obligation. As such, the court found dismissal was appropriate. Last, the court addressed the $500 per CFU COGSA limitation of liability. The plaintiff/consignee argued the “fair opportunity” doctrine to declare a higher value was not met because the MSC Waybill failed to explicitly incorporate COGSA or refer to the $500 per package limitation, “which would have constituted prima facie evidence of fair opportunity.” Noting that the provision MSC relied upon to support fair opportunity and the limitation of liability was not attached to the original motion or any pleading, but instead was only included with the reply briefing on the motion, the court found that it could not be considered on the motion to dismiss. The court also noted that the originally submitted MSC Waybill differed in material respects from the one submitted with the reply briefing, and, therefore, there were genuine issues of material fact on “what shipping documents were provided to what parties and when,” thereby preventing summary judgment.
United Specialty Insurance Co. v. Barriga, 2023 WL 2978978, DO80066 (Ca. Ct. App. Apr. 18, 2023). In this non-precedential decision, the California Court of Appeals affirmed a grant of summary judgment in favor of a commercial auto liability insurer. The court agreed with the trial court that the insurance policy did not provide any third-party liability coverage for a wrongful death action arising out of a vehicle accident that occurred in Mexico, outside of the policy’s defined coverage area. As an attempt to avoid the geographical limitation provision of the policy, the decedent’s estate argued the “accident” or “loss” occurred in the United States because the decedent was transported to the United States following the accident and the decedent died while in the United States. The court held such an interpretation was inconsistent with the policy language. With respect to potential obligations under the MCS 90 endorsement on the policy, the court found policy provisions not inconsistent with the MCS 90 remain in full force and effect. Citing other decisions and the enabling statute for the MCS 90, the court held the MCS 90 only applied with respect to accidents occurring within the United States and did not otherwise invalidate the territorial coverage provision of the policy. As such, the court held there was no coverage and no surety obligation under the MCS 90 endorsement with respect to the accident.
OOIDA Risk Retention Grp. v. Charity Contract Hauling, LLC, 2023 WL 2711408, C.A. No. 1:20-cv-259 (M.D.N.C. Mar. 30, 2023). In this insurance coverage declaratory judgment action, the court granted summary judgment to the insurer, finding it had no coverage and no resulting duty to defend or indemnify in connection with an accident. The insurance policy only provided coverage for specifically named autos. The operative lawsuit indicated the at-issue vehicle was a “2020 Hino,” which the court noted was not one of the three listed vehicles on the policy. Comparing the allegations of the Complaint with the clear policy language, the court found “the alleged claims could not possibly fall within the Policy.” Accordingly, the court held the insurer had no duty to defend with respect to the lawsuit, and further, because there was no duty to defend, there could be no duty to indemnify. Last, it reiterated that the MCS 90 endorsement on the policy, which the insurer acknowledged applied under the facts of the loss, created no duty to defend.
Henson v. Merob Logistics, LLC, 2023 WL 2981556, C.A. No. WD85158 (Mo. Ct. App. Apr. 18, 2023). The Missouri appellate court affirmed the trial court’s denial of an insurer’s motion to intervene in a wrongful death action against a driver and motor carrier who had previously settled under a “non-execution agreement” with the decedent’s estate. The tractor was insured under an American Millennium Insurance Company (AMIC) policy, whereas the trailer, owned by Amazon, was insured under a Zurich policy. AMIC tendered its $1,000,000 limits of liability, but believing that the driver and/or the motor carrier may be insured under additional policies, the Estate entered a non-execution agreement with each, whereby the Estate agreed that, in exchange for the policy limits paid by AMIC, the Estate would not levy execution against any personal assets of either the driver or the motor carrier other than liability insurance coverage available to either by any insurers other than AMIC or any proceeds the driver/motor carrier might recover from claims against insurers for failure to defend or settle claims against each. The Agreement further provided the Estate would file a wrongful death action against the driver and motor carrier in Missouri, and both agreed not to challenge either venue or personal jurisdiction, though they were otherwise free to answer with both admissions and denials as they saw fit. The Agreement further provided for a distribution of the assets from the AMIC policy to Decedent’s children, and all parties agreed to file a joint motion with the court to approve the agreement and distribution. The Agreement also provided, “If investigation or discovery reveals additional potential insurance, [driver] and [motor carrier] and their personal counsel agree to tender their defense to that insurance company.” The Agreement further provided that, if any additional insurer then rejected a request for an unconditional defense, “[driver] and [motor carrier] agreed to reject any defense under reservation and resolve the [the Estate’s] claims through binding arbitration under the provisions of the Missouri Uniform Arbitration Act and the Federal Arbitration Act.” The Agreement also noted that the Estate, driver, and motor carrier had negotiated “a separate arbitration agreement that they agree[d] to execute if any additional insurance companies rejected [driver] and/or [motor carrier’s] request for an unconditional defense of the claims.” A Missouri trial court thereafter approved the Agreement, following which the Estate filed suit. In response, the driver and motor carrier tendered the suit to Zurich and demanded a defense and indemnification, demanding a response within 14 days. When Zurich did not respond by either accepting or denying the tender within the allotted 14 days, the Estate submitted its wrongful death claim to binding arbitration. The letter further advised Zurich that the arbitration was scheduled for September 3, 2020, and that Zurich was invited to participate. Zurich chose not to attend, and, after the hearing, the arbitrator entered an award, finding the driver negligent and 90% at fault, the motor carrier vicariously liable for the driver’s negligence, and Decedent contributorily negligent and 10% at fault. The arbitrator awarded total damages to the Estate in the amount of $11,071,647.82. The Estate thereafter filed an unopposed motion to confirm the arbitration award, following which Zurich filed its motion to intervene. The very next day, the trial court entered an order confirming the arbitration award, which was followed a day later by Zurich’s second motion to intervene and request to vacate the judgment. Following some procedural wrangling, the trial court denied Zurich’s motion to intervene, resulting in the appeal before the court. First, the appellate court found that the Missouri statutory law upon which Zurich relied to argue it had an unconditional right to intervene did not apply to the nonexecution agreement between an Oklahoma resident and two Texas residents regarding a vehicle crash that occurred in Kansas. With respect to its right to intervene under Missouri Rule 52, the court held that an insurer as potential indemnitor lacks an interest sufficient to implicate intervention as a matter of right in the action. Instead, the court suggested the insurer’s recourse was via declaratory judgment action, though the court seemingly acknowledged any determination in the declaratory judgment action would be limited to issues of coverage and not liability defenses. The appellate court further held the trial court did not err in denying permissive intervention to Zurich, rejecting that Zurich’s objection to the arbitration award had common questions of both law and fact with the Estate’s wrongful death petition. The court further rejected Zurich’s due process argument, finding Zurich had adequate remedies via its declaratory judgment action and the separate garnishment proceeding by which to present its arguments against the arbitration award. Finally, because the court ruled that Zurich’s motion to intervene was properly denied, it further affirmed the trial court’s denial of Zurich’s motion to modify or vacate the arbitration award because Zurich was a “stranger” to the award.
Lexington Ins. Co. v. Progressive Comm. Cas. Co., 2023 WL 2667998, C.A. No. 1:22-cv-158 (N.D.W.V. Mar. 28, 2023). This matter was before the court on a motion to remand. Lexington Insurance Company insured Bennett International Logistics and Progressive insured KTK Transport, LLC. Bennett and KTK entered into a contract whereby KTK would transport freight from Oklahoma to West Virginia. Evidently, the freight was damaged while in the possession of KTK. Lexington, as subrogee of Bennett, filed suit against KTK and its driver under the Carmack Amendment. Neither defendant appeared, and Lexington was granted default judgment for $59K plus pre and post-judgment interest and costs. Lexington thereafter instituted a declaratory judgment action against Progressive, as the insurer for KTK, to enforce the default judgment. Progressive removed the declaratory judgment action to federal court, contending the default judgment, inclusive of interest and alleged attorneys’ fees, exceeded the $75K jurisdictional threshold. Lexington sought remand. Noting that the pre and post-judgment interest plus the total $59K default judgment still only totaled approximately $70K at the time of filing the removal, Progressive was still $5K away from meeting the jurisdictional amount. Progressive argued “costs,” as sought by Lexington, could include its attorneys’ fees in both the underlying action plus the declaratory judgment action, but the court found such interpretation was inconsistent with West Virginia law, which does not include attorneys’ fees in “costs” unless specifically provided. Further, the court indicated this was not the normal insurance coverage declaratory judgment action that might enable the prevailing insured to recover its attorneys’ fees. As such, the court found the $75K jurisdictional amount was not met and remanded the action to state court for further handling.
A&R Logistics, Inc. v. American Zurich Ins. Co., 2023 WL 3093577, C.A. No. 1-22-1256 (Ill. Ct. App. Apr. 26, 2023). In this insurance coverage declaratory judgment action arising out of a denial of coverage for injuries to an employee of a trucking company, the court performed an in-depth analysis of choice of law principles for policies issued in one state but providing benefits in other states. The injured worker was employed by A&R Logistics at its West Virginia facility. The worker was injured while unloading his truck during a delivery in Ohio. The injured worker filed a workers compensation claim and separate lawsuit in West Virginia state court (that was ultimately removed) based upon West Virginia’s deliberate intention exception to workers compensation exclusivity. The Zurich workers compensation policy included a West Virginia-specific endorsement that excluded from coverage under that policy “bodily injury intentionally caused or aggravated by [A&R] or which is the result of [A&R’s] engaging in conduct equivalent to an intentional tort, however defined, including by [A&R’s] deliberate intention as that term is defined by W.Va. Code § 23-4-2(d)(2).” Zurich separately insured A&R under a CGL policy that included “Stop Gap Employers Liability Coverage,” which stated that Zurich had a duty to defend A&R in any lawsuit seeking damages for “bodily injury by accident” sustained by A&R’s employees. The CGL policy excluded from coverage bodily injury “intentionally caused or aggravated by A&R.” The policy also stated that, “[f]or injury to ‘employees’ subject to West Virginia Workers’ Compensation Laws, this exclusion applies only if the act causing or aggravating the injury is of deliberate intent as defined by SB744 paragraph (2)(ii).” A&R tendered the defense of both suits to Zurich. A&R denied coverage under the workers’ compensation policy based upon the intentional act exclusion but provided coverage under the CGL policy, acknowledging that the intentional act exclusion under the CGL policy was unenforceable in light of a recent West Virginia Supreme Court decision. A&R ultimately settled the workers compensation claim and the separate lawsuit, incurring approximately $380,000 in costs in doing so. A&R then filed the instant declaratory judgment action against the Zurich entities in Illinois state court. The trial court dismissed the declaratory judgment action, finding that Illinois law applied to the interpretation of the two Zurich policies and that, regardless of whether West Virginia or Illinois law applied, they would produce the same result—that the denial of coverage under the Zurich workers compensation policy was valid. The appellate court agreed with the trial court that, regardless of application of West Virginia or Illinois law, the intentional act exclusion under the Zurich workers compensation policy was nevertheless enforceable. Insofar as the court determined the denial under the Zurich workers compensation policy was appropriate and consistent with applicable law, it dismissed the declaratory judgment action for failure to state a claim. The court also rejected A&R Logistics’ argument that the trial court improperly decided the matter on the merits at the motion to dismiss stage, finding the operative pleadings sufficiently alleged matters raising the choice of law issue, such that it was appropriate for the trial court to decide those via the motion to dismiss.